RBS, others sue Dubai Group over $10 bln debt
DUBAI - Reuters
People walk past a Royal Bank of Scotland (RBS) building in London England. RBS, Commerzbank and Standard Bank have abandoned talks on restructuring Dubai Group’s liabilities and have threatened legal action to reclaim debt owed to them. REUTERS photoRoyal Bank of Scotland and two other banks have begun legal proceedings against an investment vehicle owned by Dubai’s ruler, seeking immediate repayment after abandoning talks to restructure $10 billion in debts.
RBS, along with German lender Commerzbank and South Africa’s Standard Bank, had abandoned talks on restructuring Dubai Group’s liabilities and had threatened legal action, sources told Reuters in July.
Legal action to reclaim debt owed has so far been unprecedented in an emirate where banks have tended to take the best terms on offer due to an opaque legal system and to avoid jeopardizing chances of winning future business.
The three lenders have decided to pursue “legal recourse under the facility documentation,” RBS said in a statement, adding it was forced to take the action after several concessions offered to the group failed to secure a solution.
All three banks part of unsecured creditors
“We do, however, want to make clear that our preference was always to conclude an agreement without formal legal proceedings and we therefore remain open to such an outcome if an acceptable commercial resolution is forthcoming,” the statement said.
The case has been filed in a London court and law firm SNR Denton is representing the banks, two sources familiar with the matter said. Clifford Chance is representing Dubai Group.
All three banks were part of a group of unsecured creditors, the largest of three groups negotiating with Dubai Group, a unit of Dubai Holding, the personal investment arm of Sheikh Mohammed bin Rashid al-Maktoum.
RBS had been co-chair of the creditor committee representing banks with either little or no security tied to their cash.
“We believe that we can reach a consensual agreement with our creditors,” Dubai Group said in a separate statement.